# Franchise Units in Separate LLCs

> Each franchise unit in its own LLC? See which entity applies, how statement names must match, how transfers and combined obligations are read by Merchant Fund Express.

Source: https://mfebusinessloans.com/franchise-funding/separate-llcs/ (Merchant Fund Express, updated 2026-10-21)

## The short answer

Most multi-unit franchise owners hold each unit in its own LLC, and Merchant Fund Express is built for that. The entity whose bank account receives the unit's deposits is the entity that applies, and each one is reviewed on its own statements. Transfers between your entities are not counted as revenue, and what the group already owes is counted once. Amounts run from $25,000 to $5,000,000.

## Which of my LLCs should apply?

The applicant is the entity that earns the revenue and will make the payments. In practice that means the LLC whose name is on the merchant processing account and the operating bank account where the unit's card settlements land. If Unit 2's sales settle into Unit 2 LLC's account, Unit 2 LLC applies for Unit 2's capital.
Where the need sits in one unit but the strength sits in another (common when opening the next unit, see funding a second franchise location), the stronger entity applies and the use of funds is stated plainly. The general rules for LLC applicants are on funding for an LLC.

## Which structure do I have, and how does it apply?

Structure | Who applies | How deposits are read | Watch for |
One LLC holds every unit | That LLC | One set of statements shows all units' deposits combined; the payment is sized to the total | Simplest file; one problem unit shows up in everyone's numbers |
One LLC per unit | Each unit's LLC on its own | Each entity is read on its own deposits, royalty and ad fund debits | Each unit can use a different product; a strong unit is not dragged down by a new one |
Holding company + unit LLCs | The unit LLC that holds the bank account | The holding company usually has no sales deposits of its own, so it is rarely the applicant | Show the ownership chain so the 50% ownership test is clear |
Management company + unit LLCs | The unit LLC | Management fee transfers out of the unit are read as a recurring cost | Payroll paid from the management company does not appear on the unit statement; say so |
Tier 1 products (the term loan and line of credit) need at least 50% ownership. If you own 40% of a unit LLC with a partner, the file needs the partner who meets the test, or a Tier 2 product such as revenue-based financing.

## Do the names on my statements have to match the applicant?

Yes. The legal name on the application, the bank statements and the processing statements should be the same entity. Mismatches slow files down more than almost anything else. Check these before you apply:
The bank account is titled in the applying LLC's legal name, not the trade name alone and not a sister entity.
The merchant processing account settles to that same account.
If the unit trades under the brand name, the statement shows the LLC and the trade name, or you can show the registration linking them.
A recent name change or new account has its prior statements ready too.
The person signing owns the share the product requires.

## How are transfers between my LLCs treated?

Money moved from Unit 1 LLC to Unit 2 LLC is not revenue for Unit 2. Merchant Fund Express separates those transfers out and sizes the request on sales deposits only (see what deposits count as revenue). Regular transfers that cover another unit's payroll are fine; they simply show which unit is carrying which. A unit that only stays positive because a sister entity tops it up every week will be read that way.

## How are combined obligations counted?

Each entity's own payments (royalty, ad fund, rent, current advances, equipment notes, an SBA payment) come off its own deposits. Then the group is looked at as a whole: positions that sister entities carry are listed on the business debt schedule so the new payment is sized against what the owner is really carrying. A new structure can lower the payment where existing positions are heavy; see franchise funding with existing advances.

## Worked example: three units, three LLCs, one owner

Entity | Hypothetical deposits | Product that fits |
Unit A LLC | $48,000 a month, 6 years open | Term loan, first position (no current advance) |
Unit B LLC | $31,000 a month, 2 years open | Revenue-based financing (Tier 2: under 3 years) |
Unit C LLC | $22,000 a month, 9 months open, $2,500 a month in management fees out | Small working capital request, fees counted as a cost |
Group view | $101,000 a month combined | All three positions listed together when the next request comes in |
Unit A's term loan cap is 15% of annual revenue: $48,000 x 12 x 15% = $86,400. Unit B and Unit C do not raise that figure, because they are separate entities.
Figures in this example are illustrations of the arithmetic, not an offer, quote or approval. Real terms depend on the file and the funder.

## Keep reading

Multi-unit franchise funding: Capacity across several units and openings.
Funding for an LLC: General rules for LLC applicants.
Franchise documents checklist: What each entity sends.
Franchise funding hub: Every franchise page in one place.

## Common questions

### Can my holding company apply for all units at once?

Usually not, because it has no sales deposits. Each unit LLC that earns revenue applies, and the group's positions are counted together.

### Do I need a separate application per LLC?

Yes. Each applying entity completes the 5-minute application and sends its own 3 months of statements.

### Will a weak unit hurt my strong unit's file?

Not directly. In a one-LLC-per-unit structure, each entity is read on its own deposits. Positions the weak unit carries are still listed when the group is reviewed.

### Are management fees a problem?

No. Merchant Fund Express reads them as a recurring cost, like royalty and ad fund debits, and sizes the payment after them.

### Can a sole proprietor with one unit apply?

Yes. Sole proprietors are eligible; the account in the owner's business name is the one reviewed.

### What if one unit LLC has a minority partner?

Tier 1 products need at least 50% ownership by the signer. Otherwise the majority partner signs, or a Tier 2 product fits.

Apply with Merchant Fund Express: https://merchantfundexpress.com/current-application.html?utm_source=mfebusinessloans.com&utm_medium=franchise&utm_campaign=franchise-funding&utm_content=separate-llcs